Accounting for Public Private Partnerships

Abstract

A public–private partnership (PPP) can be defined as a cooperative arrangement between the public and private sectors for the sharing of the risks and responsibilities for the provision of asset–based (infrastructure) services. The long–term contractual nature of the business relationship leads to difficult financial issues, related to taxation, cash flow budgeting and disclosure rules. In addition, the number of entities with an interest in the outcome puts a premium on accountability in the broad sense. Neither traditional models of public sector accountability nor those developed for private sector entities are adequate. A new paradigm is required which takes into account the complexity of the risk–sharing mechanisms and identifies clearly the rights and responsibilities of the various partners.